Philippine Agriculture Shows Resilience in Q1, But Challenges Loom Ahead

The Philippine agricultural sector notched a 1.9% year-on-year growth in the first quarter of 2025, defying headwinds like climate disruptions and global trade tensions. While poultry and fisheries emerged as bright spots, the uneven performance across sub-sectors underscores both opportunities and vulnerabilities for investors. This analysis unpacks the drivers of growth, underlying risks, and the policy landscape shaping the sector’s trajectory.

Agricultural Sub-Sectors: Winners and Losers
The agricultural sector’s Q1 expansion was driven by strong performances in poultry and fisheries, which offset weaker results in crops and livestock.

• Poultry: This sub-sector led the charge with a 9.4% surge, reaching P75.22 billion. The growth likely stems from rising domestic consumption and potential export gains, as chicken becomes a cost-effective protein source amid inflationary pressures.
• Fisheries: Aquatic production rebounded by 1.5%, hitting P55.10 billion, possibly due to improved resource management and restocking efforts.

In contrast, crop production grew just 1% (to P249.61 billion) despite being the largest contributor to agricultural output. Livestock, however, contracted by 2.8%, dragged down by a 3.7% drop in hog production—a red flag signaling supply-chain inefficiencies or disease outbreaks.

Policy and External Drivers
Government actions and global trends played a dual role in shaping this quarter’s results:

1. Fiscal Stimulus and Infrastructure: Increased spending on rural infrastructure and election-related projects likely improved market access for farmers, indirectly supporting growth. The Bangko Sentral ng Pilipinas’ rate cuts in 2024 also eased inflation, boosting consumer demand for agricultural goods.
2. Trade Winds: While U.S. tariffs threaten export-oriented sectors, coconut oil provided a silver lining. Global demand for this “healthy” oil—used in food, cosmetics, and biofuels—pushed prices to $1,860 per metric ton, a 12% jump from December 2024 levels. However, El Niño-induced droughts reduced coconut yields, cutting copra production by 15% and raising costs. Aging coconut trees and delayed replanting programs exacerbated the strain.

The EU’s delayed deforestation regulation (EUDR) enforcement until December 2025 also provided temporary relief for coconut exporters, avoiding immediate compliance costs.

Risks and Investment Considerations
Despite the positive growth, investors must navigate several risks:

• Livestock Supply Chain Weakness: The hog sector’s decline suggests vulnerabilities in disease management and logistics. Without policy fixes, this could constrain future expansion.
• Climate and Commodity Volatility: Coconut oil’s price spike reflects both demand and supply constraints. Investors in coconut-related businesses must monitor weather patterns and replanting progress closely.
• Global Trade Uncertainties: While coconut oil shines, U.S. tariffs and geopolitical shifts could disrupt export markets for other commodities. Diversification into domestic-focused sectors like poultry may offer safer bets.

Conclusion: A Sector Divided
The Philippine agricultural sector’s 1.9% growth highlights its resilience but also its fragility. Poultry and fisheries present clear investment avenues, backed by robust demand and manageable supply dynamics. Meanwhile, crops and livestock face structural challenges requiring government intervention.

The data paints a nuanced picture:
- Poultry’s 9.4% growth and coconut oil’s 12% price surge signal strong demand trends.
- Livestock’s 2.8% contraction and coconut’s 15% yield drop underscore supply-side risks.

Investors should favor poultry and fisheries stocks while remaining cautious on livestock until supply issues are resolved. The Philippine Stock Exchange Agriculture Index () could serve as a proxy for sector sentiment. Additionally, monitoring copra production levels and U.S.-Philippines trade relations will be critical for anticipating future volatility.

In short, the Philippine agricultural sector is growing—but its path forward hinges on addressing supply bottlenecks and leveraging global demand for health-conscious commodities like coconut oil. For investors, this is a sector of two halves: one thriving, the other needing repair.